Don't bother, seriously, I have done this twice. Oh, it will run, but it will leave a bad taste in your mouth and really disappoint your friend. My sisters iMac was finally upgrade hardware wise and now has a 500Mhz processor upgrade, a 7200 RPM HD, and 512MB of ram. This machine is the 333 iMac. It runs smooth with the upgrades, but you still don't want to over task it, three apps max. I have my Dad's 333 iMac running with 512MB ram, and a 7200RPM HD with the 333 processor still intack, really disappointing; the processor is just not up to the task. To be fair I suspect the quality of the ram, but it's not worth testing. My advice to you is this, make sure you have the latest version of Mac OS 9.2.2, it runs great on this Mac and leave it at that. If you have not spent any money on this Mac don't bother doing that now, you can buy a new eMac for $800, it's just not worth it unless you have already invested some money into, ie HD, Processor, CDRW, and/or 512 ram. You could fine a HD for $80, new processor for $200, CDRW for $200, 512 quality ram $100 your out close to $600, another $200 and you have an new eMac built to run Mac OS X.
As the person above mentioned, OS X runs great on a iMac 350, but one important thing to remember is that when the new iMacs came out they were 2nd generation and the system bus was bummed up to 100Mhz, the orininal iMacs and subsequent 1st gen iMac run on 66NMhz, that makes a huge difference.
Seriously, keep Mac OS 9.2.2 on it or get a new machine. I know a lot of people like this machine, but if you want to run OS X buy one of the later models if you must have this design. They had gone up to 700Mhz and the last runs were dropped back down to 600Mhz and all ran at 100Mhz for a system bus. The eMac is the way to go if you don't have a lot of money and running OS X is what you want to do. Personally OS X runs easy circles around OS 9, but that does not make 9 a bad OS, just dated now.
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